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NAVI MUMBAI - 400703

Session 2016-2017

Submitted by
ROLL NO 72014


A successful project is the result of team work and co-

ordination that includes not only group of developers
who put forth the ideas and efforts but also those who
guided them.
So at the completion of the project, I feel obliged to
extent my gratitude towards all those who made
valuable contributions throughout my training period.
In addition, I wish to convey deep sense of gratitude
towards Prof. Mrs. Aabha Maheshwari at any time I
And all the other staff members who have provided
me excellent knowledge and support throughout my
Post Graduation career.
I am very much thankful to my parents, sisters and
friends for their continuous support.


This is to certify that Mr Gupreet Singh is a

bonafide student of Tilak College, Vashi has
successfully completed the project as prescribed by
the University of Mumbai in the partial fulfillment of
the requirement of Bachelor of Banking & Insurance
(BBI) Program for the Academic Year 2016-2017

The project titled as Retail Banking in HDFC


Project Guide
(Mrs Abha Maheswari)


I, the undersigned, hereby declare that the project

report entitled Retail Banking in HDFC BANK
submitted by me is in partial fulfillment of the
requirement for the award of degree of Bachelor of
Banking & Insurance under the guidance of Prof. Mrs
Aabha Maheshwari. Is my original work and the
conclusions drawn therein are based on the material
collected by myself.

The Report submitted is my own work and has not

been duplicated from any other source.
I shall be responsible for any unpleasure moment


Date :

1. Introduction 5
2. Profile of the company 14
3. Theoretical Perspective 22
4. Objective of the study 30

Title of the Project

Objective of the study

Scope of the study

5. Research Methodology 36
Data analysis and Interpretations using 40
6 various chart and graphs.
7. Conclusions 48
8. Limitations of the project 51
9. Recommendations 53

Copies of




Retail banking is, however, quite broad in nature - it refers to the dealing of
commercial banks with individual customers, both on liabilities and assets sides
of the balance sheet. Fixed, current / savings accounts on the liabilities side; and
mortgages, loans (e.g., personal, housing, auto, and educational) on the assets
side, are the more important of the products offered by banks. Related ancillary
services include credit cards, or depository services. Today's Retail banking
sector is characterized by three basic characteristics:

Multiple products (deposits, credit cards, insurance, investments and


Multiple channels of distribution (call centre, branch, Internet and

kiosk); and

Multiple customer groups (consumer, small business, and corporate).

What is the nature of Retail banking? In a recent book, Retail banking has been
described as "hotter than vindaloo". Considering the fact that vindaloo, the
Indian-English innovative curry available in umpteen numbers of restaurants of
London, is indeed very hot and spicy, it seems that Retail banking is perceived to
be the in-thing in today's world of banking.

There are various banks providing the retail services to the consenter all over
India namely HDFC Bank, ICICI Bank, SBI, HSBC Bank, Axis Bank etc.

Characteristics of Retail Banking:-

1. Economic prosperity and the consequent increase in purchasing power have

given a fillip to a consumer boom. Note that during the 10 years after 1992,
Indias economy grew at an average rate of 6.8 percent and continues to grow at
the almost the same rate not many countries in the world match this

2. Changing consumer demographics indicate vast potential for growth in
consumption both qualitatively and quantitatively. India is one of the countries
having highest proportion (70%) of the population below 35 years of age (young
population). The BRIC report of the Goldman-Sachs, which predicted a bright
future for Brazil, Russia, India and China, mentioned Indian demographic
advantage as an important positive factor for India.

3. Technological factors played a major role. Convenience banking in the form of

debit cards, internet and phone- banking, anywhere and anytime banking has
attracted many new customers into the banking field. Technological innovations
relating to increasing use of credit / debit cards, ATMs, direct debits and phone
banking has contributed to the growth of retail banking in India.

4. The Treasury income of the banks, which had strengthened the bottom lines of
banks for the past few years, has been on the decline during the last two years.
In such a scenario, retail business provides a good vehicle of profit maximization.
Considering the fact that retails share in impaired assets is far lower than the
overall bank loans and advances, retail loans have put comparatively less
provisioning burden on banks apart from diversifying their income streams.

5. Decline in interest rates has also contributed to the growth of retail credit by
generating the demand for such credit.


Banks are awash with liquidity. Prime corporates do not borrow from banks
except at sub-PLR rates. Banks do not favor other corporates. Suddenly there is
a great change in attitude of banks. The name of the game is no longer Lending
to big corporates, huge amounts to create loan assets. Banks invest their
resources in government paper to the hilt and then scout for hitherto neglected
retail borrowers for lending. Retail credit is now welcomed even from RBIs

perspective. There are no longer any regulatory hurdles. Consumer credit is no
longer considered as unproductive, as it triggers demand for consumer products,
which in turn help manufacturers in a period of economic slowdown. Retail to
project credit stands to a ratio of 3: 1. While the rates of interest on consumer
credit have still fallen, there is a scope for further reduction. Perhaps, competition
will further bring down the interest rates.

Fixed interest rates on housing loan have sharply fallen, but not the floating
rates, which are linked to medium and long-term PLRs. Banks, refuse to reduce
these rates, which appears rather unfair. But then the consumers still needs
innovative products like graduated payment mortgages etc., in place of stand
alone EMI structures.

SME sector borrowers still appear to be suffering from inadequate and delayed
credit delivery this sector has immense potential for growth and banks have to
devise innovative strategies to fund their ventures on the principle of
entrepreneurship and bank ability rather than mere collateral securities.

Micro finance, another area of retail credit, has unfortunately become a so-called
priority sector credit. Perhaps it will be a great idea if it is delinked from the
obnoxious priority tag and thereby allow banks to display creativity in financing

the sector, especially in rural and semi-urban areas where its potential for
positive transformation of socio-economic conditions is immense. Banks are
gradually appreciating the virtue of spreading the credit risk by financing large
number of small (Retail) borrowers.

Credit card business is growing and even government banks have started
marketing cards. Surprisingly, they still do not leverage the network of branches
and availability of surplus manpower into effective marketing. The interest rates
on credit cards that are 30 percent per annum refuse to come down. May be with

the active participation of many banks in this lucrative business, the customer will
eventually have the benefit of low rates. Thanks to the on set of ATMs, channel
migration is visible.

The personal banking segment customers have become the center of attraction.
It is their deposit and savings account that are actively sought after, and not
mega deposits at a slightly higher rate of interest. Banks are truly spreading their
deposit net rather widely.

It perhaps apt to quote what Hugh McCulloch, secretary of the treasury UK,
said long ago Distribute your loans rather than concentrate them in a few
hands. Large loans to a single borrower or a firm, although some times proper
and necessary, are generally injudicious and frequently unsafe. Large borrowers
are apt to control the bank, and when this is the relation between a bank and its
customers, it is not difficult to decide which one in the end will suffer.


The Retail Banking environment today is changing fast. The changing customer
demographics demands to create a differentiated application based on scalable
technology, improved service and banking convenience. Higher penetration of
technology and increase in global literacy levels has set up the expectations of
the customer higher than never before. Increasing use of modern technology
has further enhanced reach and accessibility.

The market today gives us a challenge to provide multiple and innovative

contemporary services to the customer through a consolidated window as so to
ensure that the banks customer gets Uniformity and Consistency of service
delivery across time and at every touch point across all channels. The pace of
innovation is accelerating and security threat has become prime of all electronic

transactions. High cost structure rendering mass-market servicing is
prohibitively expensive.

Present day tech-savvy bankers are now more looking at reduction in their
operating costs by adopting scalable and secure technology thereby reducing
the response time to their customers so as to improve their client base and
economies of scale.

The solution lies to market demands and challenges lies in innovation of new
offering with minimum dependence on branches a multi-channel bank and to
eliminate the disadvantage of an inadequate branch network. Generation of
leads to cross sell and creating additional revenues with utmost customer
satisfaction has become focal point worldwide for the success of a Bank.

Retail Banking solution centre in Polaris has established itself as a One-stop

solution for Retail Banking to cater to the customers with an aim to create a
sustainable profitable core proposition.

Maximum services availing by customer:-

Our Major Offerings:-

Retail Banking solutions and services.

Credit cards
Internet Banking.
Mortgages practice.
Multi-Channel Integration.
Business Rule Engine.
Customer Relationship Management.
ATM Solutions and services

Key Benefits Associated with Offerings:-

On-line, real time processing and cost saving thru Multi channel

Relationship banking enabled through extensive mining of all customer

Rapid time-to-market with new product and service offerings.
Rapid Customer Acquisition. Multi-currency and multi-language support
so as to ensure geographic reach across continents.
Multi-layer security, monitoring and reporting.

Seamless integration with advanced delivery systems including teller and branch
automated teller



Retail banking has inherent advantages outweighing certain disadvantages.

Advantages are analyzed from the resource angle and asset


Retail deposits are stable and constitute core deposits.

They are interest insensitive and less bargaining for additional interest.
They constitute low cost funds for the banks.
Effective customer relationship management with the retail customers built
a strong a strong customer base.
Retail banking increases the subsidiary business of the banks.


Retail banking results in better yield and improved bottom line for a bank.
Retail segment is a good avenue for funds deployment.
Consumer loans are presumed to be of lower risk and NPA perception.
Helps economic revival of the nation through increased production activity.
Improves lifestyle and fulfills aspirations of the people through affordable
Innovative product development credit.

Retail banking involves minimum marketing efforts in a demand driven
Diversified portfolio due to huge customer base enables bank to reduce
their dependence on few or single borrower
Banks can earn good profits by providing non fund based or fee based
services without deploying their funds.


Designing own and new financial products is very costly and time
consuming for the bank.

Customers now-a-days prefer net banking to branch banking. The banks

that are slow in introducing technology-based products, are finding it
difficult to retain the customers who wish to opt for net banking.

Customers are attracted towards other financial products like mutual funds

Though banks are investing heavily in technology, they are not able to
exploit the same to the full extent.

Major disadvantages are monitoring and follow up of huge volume of loan

accounts inducing banks to spend heavily in human resource department.

Long term loans like housing loan due to its long repayment term in the
absence of proper follow-up, can become NPAs.

The volume of amount borrowed by a single customer is very low as
compared to wholesale banking. This does not allow banks to exploit the
advantage of earning huge profits from single customer as in case of
wholesale banking.



About HDFC Bank:-

The Housing Development Finance Corporation Limited (HDFC) was amongst

the first to receive an in principle approval from the Reserve Bank of India (RBI)
to set up a bank in the private sector, as part of the RBIs liberalization of the

Indian Banking Industry in 1994. The bank was incorporated in August 1994 in
the name of HDFC Bank Limited, with its registered office in Mumbai, India.
HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995.

HDFC is Indias premier housing finance company and enjoys an impeccable

track record in India as well as in international markets. Since its inception in
1977, the Corporation has maintained a consistent and healthy growth in its
operations to remain the market leader in mortgages. Its outstanding loan
portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities. With
its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned
to promote a bank in the Indian environment.

Capital Structure:-

The authorize capital of HDFC Bank is Ra.450 crore (Rs.4.5 billion). The paid-up
capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the

banks equity and about 19.4% of the equity is held by the ADS Depository (in
respect of the banks American Depository Shares (ADS) Issue). Roughly 31.3%
of the equity is held by Foreign Institutional Investors (FIIs) and the bank has
about 190,000 shareholders. The shares are listed on the The Stock Exchange,
Mumbai and the National Stock Exchange. The banks American Depository
Shares are listed on the New York Stock Exchange (NYSE) under the symbol

Distribution Network:-

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

network of over 761 branches spread over 327 cities across India. All branches
are linked on an online real-time basis. Customers in allover 120 locations are
also serviced through Telephone Banking.
The Bank also has a network of about over 1977 networked ATMs across these
cities. Moreover, HDFC Banks ATM network can be accessed by all domestic
and international Visa / MasterCard, Visa Electron / Maestro, Plus / Cirrus and
American Express Credit / Charge cardholders.


HDFC Bank operates in a highly automated environment in terms of information

technology and communication systems. All the banks branches have online
connectivity, which enable the bank to offer speedy funds transfer facilities to its
customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs).

The bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class
bank. The Banks business in supported by scalable and robust systems which
ensure that the bank clients always get the finest services.

The Bank has prioritized its engagement in technology and the internet as one of
its key goals and has already made significant progress in web-enabling its core
business. In each of its businesses, the Bank has succeeded in leveraging its
market position, expertise and technology to create a competitive advantage and
build market share.


HDFC Bank offers a wide range of commercial and transactional banking

services and treasury products to wholesale and retail customers. The bank has
three key business segments are follows.

Wholesale Banking Services:-

The Banks target market ranges from large, blue-chip manufacturing companies
in the Indian corporate to small & mid-sized corporate and agri-based business.
For these customers, the Bank provides a wide range of commercial and
transactional banking services, including working capital finance, trade services,
transactional services, cash management, etc. the bank is also a leading
provider of structured solutions, which combine cash management services with
vendor and distributor finance for facilitating superior supply chain management
for its corporate customers. Based on its superior product delivery / service levels
and strong customer orientation, the Bank has made significant inroads into the
banking consortia of a number of leading Indian corporate including
multinationals, companies from the domestic business houses and prime public
sector companies. It is recognized as a leading provider of cash management
and transactional banking solutions to corporate customers, mutual funds, stock
exchange and banks.

Retail Banking Services:-

The objective of the Retail Bank is to provide its target market customers a full
range of financial products and banking services, giving the customer a one-stop
window for all his/her banking requirements. The products are backed by world-
class service and delivered to the customers through the growing branch
network, as well as through alternative delivery channels like ATMs, Phone
Banking, Net-Banking and Mobile Banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC
Bank Plus and the Investment Advisory Services programs have been designed
keeping in mind needs of customers who seek distinct financial solutions,
information and advice on various investment avenues. The Bank also has a
wide array of retail loan products including Auto Loans, Loans against marketable
securities, Personal Loans and Loans for Two-wheelers. It is also a leading
provider of Depository Participant (DP) services for retail customers, providing
customers the facility to hold their investments in electronic form.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit
card as well. The Bank launched its credit card business in late 2001. By
September 30, 2005, the bank had a total card base (Debit and credit cards) of
5.2 million cards. The Bank is also one of the leading players in the merchant
acquiring business with over 50,000 Point-of sale (POS) terminals for debit /
credit cards acceptance at merchant establishments.


Within this business, the bank has three main product areas Foreign Exchange
and Derivatives, Local Currency Money Market & Debt Securities, and Equities.
With the liberalization of the financial markets in India, corporate need more
sophisticated risk management information, advice and product structures.
These and fine pricing on various treasury products and provided through the

banks Treasury team. To comply with statutory reserve requirements, the bank is
required to hold 25% of its deposits in government securities. The Treasury
business is responsible for managing the returns and market risk on this
investment portfolio.


Below are the awards received by HDFC in past 2 years:


Asiamoney FX Poll 2016 -Ranked No. 1 in the Best Domestic Provider for FX
Products and Services in India
-Ranked No.2 in the Best Domestic Provider of FX
Services and for FX Research and Market Coverage
-Ranked No. 1 in the Best Local Cash Management
Bank in India

BrandZ Top 50 Most Valuable Indian Brands HDFC Bank has been ranked India's most valuable
brand for the 3rd consecutive year

CNBC-TV18 India Business Leader Awards Outstanding Business Leader of the year
(IBLA) 2015-16

The Financial Express India's Best Banks Lifetime Achievement Award to Mr. Aditya Puri

IDRBT Banking Technology Excellence Best Bank in Banking Technology Excellence for the
Awards 2016 year 2015-16

Cisco-CNBC TV 18 Digitizing India Awards Award for Innovations in the Financial Industry &
Digital Banking

Dun & Bradstreet Corporate Awards 2016 HDFC Bank wins Dun & Bradstreet Corporate Award
2016 in the Banking sector

The Financial Express India's Best Banks - Profitability: Rank 1

Awards 2015 - Efficiency: Rank 1
- Strength & Soundness: Rank 1

Outlook Money Awards 2015 - Best Bank of the year : Runner up

- Winner : Institutional Financial Distributor of the

Pension Fund Regulatory and Development - Best Performing Bank - Maximum APY Subscribers
Authority awards for Atal Pension Yojana - Best Performing Bank in the Private sector Banks
- Best Performing Bank : Atal Pension Yojana
Carnivals in Private Sector Banks

Business Today KPMG India's Best Banks 2015 Awards

Barron's World's Top 30 CEOs Mr. Aditya Puri in Barron's Top 30 Global CEOs for
2nd year

IBA Awards HDFC Bank wins prestigious IBA Banking Technology


Business Today Best Companies to Work for in India

NABARD Award Best Bank in JLG-Bank Linkage programme in Assam

Business Today - KPMG India's Best Bank HDFC Bank wins Bank of the year and Best Digital
Banking Initiative awards


National Payments Excellence Awards HDFC Bank wins NPCI National Payments Excellence
2015 Awards

Business Today Award Best CEO Award - Mr. Aditya Puri

Kerala's State Forum of Bankers' Club Best Bank Branch


FinanceAsia Awards Best Equity Deal in Asia Award

IDC Insights Award 2015 Excellence in Customer Experience

QualTech Award HDFC Bank wins Award at 27th QIMPRO Convention

Lean Sigma project competition Best Case Study Award

IDRBT Banking Technology Excellence Best Bank Award for Cyber Security Risk Management
Awards 2014-15 among Large Banks

FinanceAsia Country Awards 2015 - Best Asian Bank

- Best Domestic Bank - India

Forbes Asia Fab 50 Companies List for the 9th year

AIMA Managing India Awards 2015 - Business Leader of the Year - Aditya Puri

Barron's - World's 30 Best CEOs - Mr Aditya Puri

Finance Asia poll on Asia's Best - Best Managed Public Company - India'
Companies 2015 Best CEO- Aditya Puri
Best Corporate Governance- Rank 3
Best Investor Relations- Rank 3

J. P Morgan Quality Recognition Award - Best in class straight Through Processing Rates



Focus shifts to retail banking

With spreads shrinking, Indian banks are following their global counterparts and
focusing on increasing the share of their fee based income. The ratio of non-
interest income to total funds has already increased for some banks and the first
quarter results of the current fiscal affirm this fact.

Within the banking sector, increasing competition and growing risk remain
important challenges, as banks concentrate on consolidation to meet
competition, the key driver in staying ahead of the competition is technology and
how well banks use it to meet the needs of their customers. In todays
sophisticated market, credit risk along with market risk and operational risk are
the real challenges before banks.

During April to mid-June, the increase in deposits was Rs.57, 988 crores during
the period of 2015 against Rs.45, 389 crores during the period of 2014 in the
previous year, that is, a rise of 19.3 percent as against 16.3 percent in the same
period last year. The proportion of time deposits as compared to demand
deposits was higher indicating spreads may shrink further. In 2001-02, the
overall growth in deposits is expected to be lower at around 16 percent, largely
due to slower growth in money supply compared with that in 2000-01, lower
interest rates on deposits especially bulk deposits and reduction in dividend
distribution taxes from 20 percent to 10 percent on mutual funds making mutual
funds a more tad-efficient investment. Said Mr. M.M. Joseph, Research Head of
SBI Capital Markets.

As the growth in scheduled commercial banks credit slowed down to 15.6

percent on a year-on-year basis from 23 percent a year ago. There was the
lowest growth recorded in year 1999 when the year on year increase in bank
credit was 15 percent. In absolute terms total credit increase by Rs.7743 crores
during 2001 against Rs.10965 crores during the corresponding period of the
previous year credit growth remained around 16.5 percent on a year-on-year

The slowdown could be attributed to lack of credit off-take by the industrial sector
even as food credit continued to surge. Because of the recession and industrial
slowdown, most corporate appear to have postponed their expansion plans and
have put on hold Greenfield projects.

Moreover big corporate are bypassing banks and raising money through the debt
market and commercial papers, which are cheaper than bank credit.

Therefore, banks are being forced to look at the mid-corporate. But, this is a risky
strategy as the risk is concentrated and delinquency higher.

To compensate, most banks have devised strategies to go in for retail banking as

a major thrust area.

The risk here is distributed and there is a huge market to be tapped, Some of
the banks which have been aggressive in this area are HDFC Bank, ICICI Bank,
State Bank of India (SBI) and Corporation Bank. Interest rates, especially on
short tenure declined due to a reducing in the Bank rate and cut in interest rates
on contractual savings such as Public Provident Fund (PPF). Some of the major
banks have reduced their prime lending rates (PLRs) and others are likely to
follow suit. The spreads have been shrinking and banks are searching for other
avenues to protect their bottom lines,

A comparison of old and new private sector banks indicates a clear difference in
profitability. New private sector banks have shown higher ROA and a higher
RONW as compared to old private sector banks. It is also interesting to see the
performance of banks over the previous year.

With spreads shrinking, Indian banks are following their global counterparts and
focusing on increasing the share off their fee-based income. Fee-based income
may increase marginally in future.

The ratio of non-interest income to total funds has increased for some banks. A
rising ratio is expected in the future.

The increase in net sales of Corporation Bank is only 5 percent while the rise in
other income is 34 percent. ICICI also raised its other income by 307 percent as
compared to a net sales increase of only 65 percent.

The growth in the economy has been sluggish and banks can no longer afford to
rely on big corporate customers. There is a shift in focus towards retail banking.
Most banks are targeting in middle class and lower middle class segment. Huge
Non-Performing Assets (NPAs) are plaguing old private sector banks. The asset
quality of banks in largely dependent on economic growth and makes it difficult
for them to recover loans till the economy revives.

Some positive policy initiatives have been taken by the Government which will
give an impetus to consolidation in the banking industry. The limit of foreign direct
investment (FDI) in private sector banks has been raised to 49 percent form 33
percent. This will allow foreign banks to buy a strategic stake in private sector
banks having the latest technology and better quality assets. This year, the
banking industry has witnessed two big mergers. Times Bank Centurion bank
and Punjab bank merged with HDFC Bank and Bank of Madura with ICICI Bank.
Banks could increase their revenue base and leverage on their distribution
network by investing in the growing insurance sector. However, the inflows would
be slow to being with. There has also been a thrust on the housing sector.

Flexible financing with lower interest rates has resulted in brisk activity in the
sector. SBI and other banks have launched voluntary retirement scheme (VRS),

and effort to bring down operating cost. There is an increased focus towards auto
loans, car loans, funding for infrastructure, and other fee-based services such as
guarantees and commissions on drafts, gold banking, derivatives and the like.

Overall, HDFC Bank, ICICI Bank and SBI have shown good performance and
appeared to be geared to take on the challenges,

These banks are changing their strategy and shifting focus from big corporates to
mid-corporates and also retail banking and housing finance. The Indian banking
system is in the midst of a technological revolution with banks offering anywhere
banking, 24/7 and also attempting to become a one stop financial shop offering
all financial solutions.

It is believed that new private sector banks such HDFC Bank and ICICI Bank has
demonstrated their ability to improve other income, which was previously the
forte of foreign banks due to good service.

This trend is expected to continue. Nationalized banks and old private sector
banks will also follow suit and there is hardly any progress in this area. If old
private sector banks have to service they will have to compete on service.

In terms of ownership, debit cards are more in number than credit cards but in
terms of transactions, use of credit cards is more prevalent than debit cards.

The ATM outlets in India increased at a rate of 34.09% from March 2014 to
March 2015.

Study of Retail Banking Products and Services by HDFC Bank

Wide range of retail banking products and services are offered by the banks,
which cover both Depository and Advances to suit various segments of customer
like salaried persons, businessmen, traders, professionals, pensioners etc. are
as follows:-

Housing loan.
Personal loan.
Vehicle or automobile loan.
Loan for consumer goods.
Credit and Debit cards-Global and international.
Loan for holidays.
Insurance products.
Gold loans.
Event loans.
Mutual funds etc.
Leasing, hire purchase and factoring services

Retail banking depositories in various segments like children, housewives,

salaried class, professionals etc. include the following: -

Flexi deposit accounts.

Savings bank accounts.
Recurring deposit account.
Fixed deposit
Other short-term deposits.

Banks are coming out with more features to add value to retail banking products
and services. These are called VALUE ADDED PRODUCTS AND SERVICES.
These include the following: -

Free collection of specified number of outstation instruments per month.

Instant credit of outstation cheque.
Concession in commission, exchange for issuance of pay orders and
demand drafts.
Issuance of free chequebooks.
Issuance of free ATM cards.
Interest rate options (fixed or floating)
Waiver of credit card issuance fees.
Free issuance of Add On cards to the members of the cardholders.
Accident insurance cover.
Arranging for insurance cover on the lockers in the bank.
Reducing the fees charged on locker facilities.
Free execution of standing instructions of customers.
Free investment advisory services.
Legal services for documentation
Services to senior citizens

Other services include: -

Payment of utility bills like electricity bills, telephone bills and water bills
etc. on due date.
Payment of monthly or quarterly education fee for children.
Payment of insurance premium on or before due dates.
Demating of shares, debentures and bonds.

Telephone banking.
Internet banking.
Making payments at doorsteps.


The present menu of bank accounts for Non-Resident Indians (NRIs) has three

1. Non-Resident (External) Rupee Accounts (NRE)

2. Non-Resident (Ordinary) Rupee Accounts (NRO)
3. Foreign Currency Non-Resident (Banks) Accounts FCNR (B)







The objective of the Retail Bank is to provide its target market customers a
full range of financial products and banking services.

Giving the customer a one-stop window for all his / her banking
requirements. The products are backed by world class service and
delivered to the customers through the growing branch network, as well as
through alternative delivery channels like ATMs, Phone Banking, Net
Banking and Mobile- Banking.

To provide customer satisfaction through retail banking services.

To study the needs of the middle-class, higher middle-class in the banking

segment and provide solutions.

To identify the extent of households / customers availing retail banking


To study the issues and challenges in retail banking

To study the recent trends in retail banking

To analyze the transforming retail banking processes and focus on

evolving process models.

To emphasize on the trends of customer relationship management in retail


To estimate the future growth of Indian retail banking.

To understand Optimization of retail banking channels.


Study related to the products and services of retail banking provided by

HDFC Bank.

All Over India HDFC Bank centers

Objective of rationale study.

Need and dislike of customers related to products and services.

Measures to improve the level of customers expectation.

Opportunities and Challenges of Retail Banking in India:-


Retail banking has immense opportunities in a growing economy like

India. As the growth story gets unfolded in India, retail banking is going to

emerge a major driver, recently identified India as the "second most attractive

retail destination" of 30 emergent markets.

The rise of the Indian middle class is an important contributory factor in

this regard. The percentage of middle to high income Indian households is

expected to continue rising. The younger population not only wields increasing

purchasing power, but as far as acquiring personal debt is concerned, they are

perhaps more comfortable than previous generations. Improving consumer

purchasing power, coupled with more liberal attitudes toward personal debt, is

contributing to Indias retail banking segment.

The combination of the above factors promises substantial growth in the retail

sector, which at present is in the nascent stage. Due to bundling of services and

delivery channels, the areas potential conflicts of interest tend to increase in

universal banks and financial conglomerates. Some of the key policy issues

relevant to the retail banking sector are: financial inclusion, responsible lending,

and access to finance, long-term savings, financial capability, consumer

protection, regulation and financial crime prevention. What are the challenges for

the industry and its stakeholders?


What are the challenges for the industry and its stakeholders?

1. Retention of customers is going to be a major challenge. According to a

research by Reichheld and Sasser in the Harvard Business Review, 5 per cent
increase in customer retention can increase profitability by 35 per cent in banking
business, 50 per cent in insurance and brokerage, and 125 per cent in the
consumer credit card market. Thus, banks need to emphasize retaining
customers and increasing market share.

2. Rising indebtedness could turn out to be a cause for concern in the future.
Indias position, of course, is not comparable to that of the developed world
where household debt as a proportion of disposable income is much higher.
Such a scenario creates high uncertainty. Expressing concerns about the high
growth witnessed in the consumer credit segments the Reserve Bank has, as a
temporary measure, put in place risk containment measures and increased the
risk weight from 100 per cent to 125 per cent in the case of consumer credit
including personal loans and credit cards (Mid-term Review of Annual Policy,

3. Information technology poses both opportunities and challenges. Even with

ATM machines and Internet Banking, many consumers still prefer the personal
touch of their neighborhood branch bank. Technology has made it possible to
deliver services throughout the branch bank network, providing instant updates to
checking accounts and rapid movement of money for stock transfers. However,
this dependency on the network has brought IT departments additional
responsibilities and challenges in managing, maintaining and optimizing the
performance of retail banking networks. Illustratively, ensuring that all bank

products and services are available, at all times, and across the entire
organization is essential for today's retails banks to generate revenues and
remain competitive. Besides, there are network management challenges,
whereby keeping these complex, distributed networks and applications operating
properly in support of business objectives becomes essential. Specific
challenges include ensuring that account transaction applications run efficiently
between the branch offices and data centre.

4. KYC Issues and money laundering risks in retail banking is yet another
important issue. Retail lending is often regarded as a low risk area for money
laundering because of the perception of the sums involved. However, competition
for clients may also lead to KYC procedures being waived in the bid for new
business. Banks must also consider seriously the type of identification
documents they will accept and other processes to be completed. The Reserve
Bank has issued details guidelines on application of KYC norms in November




The unit of observation and analysis of this survey of the bank customers of
HDFC Bank. The sampling frame in the form of a list of all customers is neither
readily available nor can it be easily prepared. One of the notable features of the
design is that the sample has been taken from a cross section of customers in
Mumbai with the objective of enhancing the precision of the estimates. The total
number of branches in India is 761 out of which 70 branches are covered by
Mumbai city. Since most of the policy decisions are been taken by the head office
which is located at Mumbai most of the centers are located at Mumbai. Hence
Mumbai and its suburb were covered in the sampling survey. A total of 1000
customers in different branches of HDFC Bank were selected in the Sample
frame. Information on some basic characteristics of the customer along with the
service availed from HDFC Bank was collected from these customers. A sub
sample of 50 customers was then used for detailed canvassing.

Coverage: -

Mumbai City and its suburb have been covered by the survey.

Reference Period:

The field operation for the customer pre-tested questionnaire was carried out

during August and September 2016.

Definition of Customer:

An organization or individual that receives a product or service from a


A Definition to Guide Customer Service:-

Define by Jack Speer, BizWatch Publisher Excellent customer service is

the process by which your organization delivers its services or products in
a way that allows the customer to access them in the most efficient, fair,
cost effective, and humanly satisfying and pleasurable manner possible.

Stratification and Selection of sample Customers:

The Customers are also classified into the following five income categories
based on the data collected on customers income. The income categories

Low, with monthly income of Rs.10, 000/- and below.

Lower Middle, with monthly income between Rs.10,000-Rs.25,000/-

Middle, with monthly income between Rs.25,000/- - Rs.50,000/-

Upper Middle, with monthly income between Rs.50,001 to Rs.1,00,000/-

High, with monthly income more than Rs.1,00,000/-

Customers in the higher income groups could generally utilize the

maximum product and services provide by the bank. And in the upper Middle
income group customer utilized the services and product in the same proportion
of higher incomer group of customers. And in the middle income and Lower
Middle incomer group customer utilized the services and product from the bank

comparatively less then the upper middle and higher income group customers.
Because high and upper income group customers expected to have larger
savings available for investment, which they invest in a variety of instruments
provided by the bank.

Sample Size and characteristics

Thus, a total of 20 sample customers were selected from each

sample, for canvassing the customer questionnaire. In all 50 customers were
selected and a detailed information was collected from these selected customers
through a pre-tested questionnaire





Distribution of Sample Customers according to their Monthly income

Monthly Income Group No. of Customers

Upto Rs.10,000 07
Rs.10,001- Rs.25000 22
Rs.25001- Rs.50000 12
Rs.50001- Rs.100000 06
Rs.100001 and above 03

It can be seen from the above, that the data collected for sample
customers according to their monthly income. The Customers having a monthly
income of Rs.10001 to Rs.25000 was the maximum i.e. 22 numbers of
customers. And the second higher income group is from Rs.25001 to Rs.50000
i.e 12 numbers of customers. And least income monthly group is from Rs.100001
and above i.e. 3 numbers of customers.

Distribution of customer on the basic of only availing services out of 50


Type of Services and Products No of customers

Net Banking 27
Phone Banking 15
E-Payment 07
Insta Alerts 20
Locker 04
ATMs 47

It can be seen from the above table and the diagram that maximum number of
customers using ATMs facility that is 47 number of customer utilized the ATMs
facility out of 50 numbers of customers and second higher services utilized by the
customers is Net banking that is 27 out of 50 customers. Third facility used by
customers is Insta Alerts that is 20 out of 50 customers. Minimum number of
customers using Locker and E-Payment services that is 04 and 07 out of 50

Since the purpose of the survey is only to estimate the number and level of
services availed of by the customers. The information on the type of the services
was also collected and the distribution is as under.

Distribution of customer on the basic of type of services availed:-

Income Level
Type of Service Below 10001 25001 50001 Above
10000 -25000 50000 100000 100000
Net Banking 2 10 8 4 3
Phone Banking 2 3 6 3 1
E-Payment - - 2 4 1
Insta Alerts - 8 6 3 3
Locker -- -- -- 1 3
ATMs 4 22 12 6 3

It can be seen from the above, that the data collected for sample customers
according to their monthly level of income. All kind off services are used by only
upper middle and high income group customers that can seen from the above
table. Below Rs.10000 monthly incomes group customers normally use ATMs,
net banking and phone banking services. And Rs.10001 to Rs.25000 monthly
income group customers use net banking, phone banking, insta Alerts and ATMs.
And above Rs.25001 to Rs.50000 income group customers use net banking,
phone banking, E-payment and ATMs services. But from the above table Net
banking, phone banking and ATMs services are used all kind of income group
customers and the service like locker and E-payment are used only upper middle

and high incomer group customers. But the maximum type of services availed by
the customer like ATMs, Net Banking and Phone Banking.

Profession wise Distribution of monthly income:-

Less than Above 10001 25001 50001 Above

10000 25000 50000 100000 100001
Professional -- -- -- 1 1
Business Men -- 2 8 3 2
Salaried Person 2 20 4 2 --
Others 5 -- -- -- --

It can be seen from the above table that profession wise distribution off monthly
income are given in this salaried persons monthly income distribution are more
number i.e. less than 10000/- (2 persons), above 10001 25000/- (20 persons),
25001-50000/- (4 persons) and 50001 100000/- (2 persons). And the second
maximum distribution is Businessmen.

Age Wise Distribution of monthly income:-

Less than 25001 50001 Above
Age 10001
10000 50000 100000 100000

18 24 5 4 1

25 39 2 15 4 3

40 59 -- 2 7 2 2

60 and above -- 1 -- 1 1

From the above table the age wise distribution of monthly income are given in
this the age between 25 39 the monthly income group customers are more
comparatively other age group. And the second maximum monthly income age
group is 40 59. And the least income age group are 60 and above.

The level of services provided by the Bank:-

Number of
Level of Services customers
Excellent 10
Very Good 9
Good 28
Average 7
Bad 2

It can be seen from the above table that the level of services provided by the
bank. In this table 28 % of customers say Good. And 10% of customers say
Excellent, 9% of customers say Very Good, 7% of customers say Average
and 2% of customers say Bad.

Ranking of the customers according to the factor are given under:-

Number of customers
Ranking Independentl Existing Tele Economic
y Customers Marketing situation
1 19 23 1 3 4
2 18 18 7 5 2
3 10 5 16 9 10
4 2 2 14 16 16
5 1 2 12 17 18

From the above table and diagram we can see that the ranking of the customers
according to the factors the first rank is given to Independently factors the
decision are taken by the customer itself rather then he ask other or other
factors. The second rank is given to Advise from Friends and Independently in
this customer takes some advice from friends and relative before take some
services from the bank. The third rank gives to Existing customers the customer
asks some kind of information from exiting customers before take the services
from the customers. Fourth rank gives toTele Marketing and Economic
Situation in this the customer take some kind of advice from the tele-marketing
executives and customer itself analysis the economic situation regarding their
products and services accordingly the customer take the decision. And the fifth

rank is given to Economic situation. The services may be Phone Banking, Net
Banking, ATMs, Mobile Banking, E-Payment, Insta Alerts and Lockers Etc. before
use the services from the bank the customer are rank the services and then he
buy the services from the bank.



The survey findings are follows:-

Debit cards have become very popular in India. But, as of date, ATM/Debit
cards have still their primary usage for cash withdrawal from the ATM

While credit cards are more popular in making payments online. There is a
growing awareness regarding RTGS amongst Indians but still around 73%
of the respondents surveyed have never used RTGS.

Fund transfer and Online bill payment emerged as the most popular
payment options in internet banking, with over 60% of the respondents
using this method.

Interestingly, many customers have been unable to use internet banking

due to the non availability of site or connectivity problems. Moreover, a
trust in the security of internet banking is yet to develop amongst the
majority of bank customers.

As far as mobile banking is concerned, its popularity is limited mainly due

to the charges for sending SMS's are not justified. Despite the available
payment options, how well customers are able to use them is still a
question. The key differentiator in future will be how banks can increase
usage of these payment options by the end user. Competitive analysis of
Indian retail sector vis--vis global retail industry.
Supportive policies and regulations of government for the retail sector.

Issues and implications related to the current foreign direct investment in

the retail sector.

Market size and growth of Indian retail sector segmented by sectors, retail
formats, and regional segmentations.

Increasing employment opportunities with stepping up of international
retail brands in India.

Behavioral pattern, preferences and expenditure capacity of Indian


Increasing acceptance of e-retailing among Indian consumers.

Evolution of franchise businesses in Indian retail sector.

IT trends in Indian retail industry and technological expansion leading to

the stores Security.

Customers preference to more and more alternate channels for


Fee based income from remittance is shrinking due to RTGS and other
technology initiatives.

Rapid penetration of Personal Computers, Mobile phones and on-line

Trading and purchase options encouraged increased usage of technology

Booming economy and continuous per capita income will further push the
living standards of people.

Banks continue to offer valued added Products and Services for

customer acquisition and retention.

Retail Banking technology is gaining its importance due to the continued


Retail Banking customers are demanding more and more features and
product differentiation.

More and more Retail customers in the age group of 25-39 with high
saving potential.

Every Bank has enough opportunities to perform without unhealthy


Business potential in Semi urban and rural areas are very high, which is
yet to be explored.



1. It was difficult to collect data from all over the country on account of restraints
of time and finance. Yet best endeavors have been made to collect latest
information and data from as many sources as have been possible.

2. The study has used convenience sample. Banks are not willing to share the
information about customers profile because of privacy policies.

3. As the sample size is very small, geographical and regional differences could
not be made.

4. Because of the time constraint, this study includes only few suburban districts
within Mumbai



From this report provides an insight into ATM users perceptions,
requirements and problems Report will help banks and vendors in making
ATM transactions user friendly and satisfying.

The findings of the survey were rather surprising from more people
accepting the norms of depositing cash / cheques in these ATMs to
waiting in long queues and finding no money left in the machine.

As many banks encourage the use of ATMs to their clients, ATMs have
today become indispensable tools for majority of banking transactions.
But, the drawbacks still seem to outweigh the benefits.

The trends have changed with people visiting more frequently to these
machines than monthly and having started using value-added services like
bill-payment and mobile top-ups among others.

Also highlights minor issues generally overlooked by banks like non
availability of deposit envelopes and not being able to print receipts after a

Customer tendency to borrow more and repay less may adversely affect
the NPA levels in future.

Future delinquency rates are not properly factored in fixing the Retail
credit pricing by few banks

Increased risk weight of Consumer Credit

Liquidity mismatches may emerge as an issue

Slight change in economic scenario may affect the whole system

Existing Retail scoring models may not predict impact of mild recession

Growing incidents of frauds and cyber crimes


1) Name of the Customer: ___________________________

2) Address of the Customer: __________________________



3) Age: __________

4) Occupation_____________________

More than More than More than

Less than Above
Rs.10001/- Rs.25001/- Rs.50001/-
Rs.10000/- 100000/-
to 25000/- to 50000/- to 100000/-

5) What facilities you utilize from your bank

Credit Net
Home Loan Saving A/c ATM
Card Banking

OD / FD /
E-Payment Insta Alerts Lockers. CC

6) Whether you are utilizing the services provided by the bank?

Yes No

7) How much time you utilized these services in a year?

Services Daily Weekly Monthly Quarterly Yearly

Insta Alerts
Net Banking

8) Please rank the factors according to you is necessary for utilizing the services
of bank

Advise from Friends

Existing customers
Phone Banking
Economic Situation

9) What is the level of service provided by HDFC BANK?

Excellent Very Good Good

Average Bad

10) Based on your past experience with bank, have you ever changed your

Yes No

11) What measures should be taken for improving the level of services of HDFC



HDFC Bank brochures

The Times of India

The Economics Times

Annual Report of HDFC Bank 2014-2015